When a quotation is variously attributed to Winston Churchill, Ike, and Helmuth von Moltke (German Chief of Staff), you know it has good progeny—so it is with "Plans are nothing, but planning is everything." As we move toward a new year, most of us will engage in some sort of planning process in an attempt to bring clarity and control to next year's results. But what many of us won't realize is that we're going about it all the wrong way.
Over the years I've seen every type of strategic planning process, from year-long rolling budgets, to half-day "hammer-it-out" sessions. Many times, those involved in the process place too much importance in the resulting plans, and far too little in the planning process itself.
Here's how it normally plays out: The owner, founder or group of upper management level executives get together and bang out a plan for the incoming year. Nobody really trusts, or likes, the process, but nevertheless a weirdly counterintuitive thing happens immediately: The plan becomes gospel—inviolable, non-negotiable and non-optional.
This dynamic—managing fiercely against a plan that comes out of a process we have little faith in—results in dysfunctional management. It's foolish to engage in planning on the assumption that the plan you come up with will play out as you want. In fact, you can be confident that it won't.
Truth is, as Mike Tyson once said, "Everyone has a plan until you hit them in the jaw." Or, as Napoleon put it, "No plan survives contact with the enemy." The point of planning is not the plan itself—the point is to develop an understanding of what's likely to happen in the future, and to be fully prepared for most circumstances. No professional golfer plays a practice round with the idea in their head that they will play the competition rounds precisely the same. They play practice rounds to be fully prepared for any eventuality on match day: What happens if I go in that bunker, land on that part of the green, miss that fairway?
Here are three ways you can make planning a powerful, vibrant process in and of itself—and get better plans as a result.
1. Embrace the process. See the planning process itself (not the resulting plan) as the main thing. Invest time to do it right. Get the right people in the room. Ask a great facilitator to help you. Roll around in the process. Luxuriate in it. Get good at it.
2. Plan to scenarios, not data points. Most people produce plans with, for example, a single projected revenue line—or if pushed, a "bad, better, best" range of projections. Sadly, life doesn't play out in single data points—it plays out in scenarios. When you're planning, start by putting together four or five likely scenarios as well as a few unlikely scenarios for your business next year: What happens if your key input cost rises 5 percent in a down market? Or your main customer goes elsewhere? Or you outgrow your existing store capacity? Plan against these, and rehearse your likely responses, so when one of them does happen, you know precisely how you're going to respond.
3. Bring the accountants in at the end. Most people start with the numbers and work backward: "I want to see a budget that shows 10 percent growth this year." Nothing happens like that in the real world. The tills don't fill up before the customers arrive—quite the opposite. Make your scenario-based plans first, then have the accountants work up the numbers. When you see the results, you might need to go back and re-plan your responses to some of the scenarios, but that's a good thing.
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